Disallowance of depreciation in connection with property of certain real property owners

(a) In general Section 167 of the Internal Revenue Code of 1986 is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection: (i) Deduction disallowed for certain real property owners (1) In general No deduction shall be allowed under this section for— (A) any applicable residential property in which an institutional investment entity (directly or indirectly) holds a majority interest, or (B) single-family residential property in which a large owner (directly or indirectly) holds a majority interest. (2) Exceptions Rules similar to the rules of paragraphs (2), (3), (4), (5), and (6) of section 163(n) shall apply for purposes of this subsection. (3) Definitions For purposes of this subsection— (A) Applicable residential property The term applicable residential property means— (i) any property described in section 163(n)(7)(C), and (ii) any improvements to real property which— (I) are directly related to dwelling units contained on property described in clause (i), and (II) are located on the site of such dwelling units. (B) Single-family residential property The term single-family residential property means— (i) any property described in section 163(n)(7)(D), and (ii) any improvements to real property which— (I) are directly related to dwelling units contained on property described in clause (i), and (II) are located on the site of such dwelling units. (C) Institutional investment entity; large owner The terms institutional investment entity and large owner have the respective meanings given such terms under section 163(n). (4) Regulations The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection, including regulations to prevent the avoidance of the purposes of this subsection.. (b) Effective date The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.